Thursday 8 December 2016

Former Central Bank chief warns UK and EU to avoid 'megaphone diplomacy'

Published 13/08/2016 | 02:30

British Prime Minister Theresa May taking a hike in the Swiss Alps with her husband Philip John May while on summer holiday
British Prime Minister Theresa May taking a hike in the Swiss Alps with her husband Philip John May while on summer holiday

The "megaphone diplomacy" between the UK and EU needs to be toned down in the wake of the Brexit vote, with quiet, thoughtful negotiations now required, former Central Bank Governor Patrick Honohan has said.

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Professor Honohan said a step-by-step, considered approach will need to be taken by Britain, as little preparation has been done on that side and the options haven't been thought through.

It comes as the pound hit a new post-referendum vote low against the euro yesterday, in further bad news for Irish exporters, amid expectations of weak economic data out of the UK.

Sterling weakened to 0.8651. The previous weakest post-Brexit vote point was 0.8627 on July 6.

Prof Honohan, who was being interviewed by Vox EU, also said Europe itself will change over the coming years.

"It will be a big mistake to look at Europe as it is now and make a leap and think that it is going to be a permanent and final destination," he said.

Asked what his advice would be to the UK at this juncture, he said: "I would say don't do your diplomacy through the megaphone. It's very easy for politicians to be in election mode.

"The referendum is over and the next phase is not campaigning, and quiet, thoughtful, low and considered negotiation is the way to go.

"And that's true also for the EU side. We've already heard the megaphone-type diplomacy going on in both sides.

"That needs to toned down if good results are to be achieved."

Prof Honohan retired as Central Bank Governor in November and was replaced by a fellow Trinity College Dublin academic, Professor Philip Lane.

Prof Honohan, who returned to Trinity, also joined the Peterson Institute for International Economics in March as a nonresident senior fellow.

Prime Minister Theresa May, who is currently holidaying in Switzerland, has said she won't trigger Article 50 and officially kick-start the Brexit negotiations, until the new year.

Bloomberg this week published a compilation of the myriad positions expected to be adopted by the various EU member states in those talks.

Ireland is looking to keep the border open and trade links as free as possible, but other European Union countries have different concerns.

The result is a complex patchwork of priorities - from fishing to shipping, an insistence on freedom of movement to the sovereignty of Gibraltar - that may run counter to what the UK wants to achieve.

"I imagine that Britain will take small steps at first and I think this will be very advisable for all concerned, not least because not much preparation has been done," Prof Honohan said.

"Official Britain has not thought through all of the options and it would be unwise of them to leap into choices that don't really need to be made early on.

"A step-by-step approach would be advisable for Britain and for Europe, because Euorpe is constantly evolving."

Meanwhile, Eurozone growth slowed as expected in the second quarter, leaving the currency bloc vulnerable to any Brexit fallout.

Gross domestic product rose 0.3pc in the three months through June, the European Union's statistics office said yesterday.

Irish Independent

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